D.A. Schmuck

Following dismissal of a motion to compel arbitration, appoint an arbitrator, and stay the action, the court determined the defendants' costs entitlement.

The successful defendants sought substantial indemnity costs based on service timing complaints, an unaccepted offer to settle, and alleged improper submissions by the plaintiff.

The court rejected those bases for elevated costs, held that the offer to settle did not justify a costs advantage, and applied the Rule 57 factors.

Partial indemnity costs were fixed at $10,000 inclusive of disbursements and HST, payable within 30 days.

The plaintiff brought a motion seeking to compel the defendants to participate in binding arbitration, appoint an arbitrator, and stay the court action pending arbitration arising from a commercial services contract.

The contract containing the arbitration clause was between the plaintiff and one defendant only, while the action also named a second defendant who was not a party to the arbitration agreement.

The court held that under s. 7 of the Arbitration Act, 1991 a party who commenced a court proceeding cannot move for a stay of that proceeding in favour of arbitration.

The court further found that compelling arbitration against only one defendant while staying the action against the other would risk multiplicity of proceedings and inconsistent results.

The motion was dismissed and the matter allowed to proceed in a single court proceeding.